Prabhudas Lilladher has given Buy recommendation for Can Fin Homes with a target price of Rs. 700 in its research report issued on Oct 17, 2022
Prabhudas Lilladher’s research report on Can Fin Homes
Canfin reported a mixed quarter as AuM growth was a beat although earnings were a miss driven by lower NIM and higher tax rate. Stronger disbursals and controlled repayments were positives. Company guided to disbursal and AuM growth of 18-20% while salaried share could reduce to 70% in medium term. Builder portfolio may reach only 0.5% over 3 years. On liabilities, CP share reduced and target is to focus on deposits over long term. Current MD’s tenure would end on 20th Oct and DMD would take charge in the interim. New MD may be appointed by CY22 end. Hiring for CFO/CRO is also in process. While recruiting senior management would be a key, Canfin’s medium term story is intact and we do not foresee operational challenges.
Outlook
We upgrade earnings for FY23/24E by 5%/3% and with likely RoE of 16.5-17.0% over FY22-25E, valuation at 1.6x is attractive. Rolling forward to Sep’24 ABV, we trim our multiple from 2.3x to 2.1x but raise TP from Rs675 to Rs700. Retain BUY.